Addicted to cheap fuel, emerging markets like India, Brazil face a climate dilemma
Rising oil prices are testing the developing world’s resolve to quit fossil fuels. The president of Brazil has fired the chief of the country’s largest oil producer — inadvertently sending its currency, bonds and stocks plunging — in a bid to keep diesel prices from spiking.
Nigeria’s dependence on low-cost gasoline threatens to scupper a year-long effort to phase out fuel subsidies. Peru and Mexico are reversing fossil fuel taxes as oil prices rise and families struggle to make ends meet, and India is under pressure to do so.
Around the world, countries spend a staggering $300 billion a year to keep a lid on fossil-fuel prices, stave off civil unrest and prop up their economies. And this year’s 20 per cent rally in oil prices has only kept those subsidies flowing. While world leaders from the U.S. to Europe to China vow to slash emissions in their bid to combat climate change, some emerging markets are deepening their dependence on dirty energy and delaying the transition to clean energy.
“They are continuing to subsidize the production and consumption of fossil fuels,” said Nathalie Girouard, head of the Environmental Performance and Information division at the Organization for Economic Co-operation and Development.“At this stage it is not very encouraging.”
Pandemic recovery efforts are exacerbating the issue, with 31 major economies having pledged at least $292 billion in Covid relief to fossil-fuel intensive sectors, according to energypolicytracker.org, a consortium of research organizations including the Columbia University Center on Global Energy Policy.
